EBA Calls for Crypto Lending to Fall Under EU's MiCA Framework

The European Banking Authority (EBA) has called for crypto lending to be brought under the European Union’s Markets in Crypto-Assets (MiCA) framework as regulators consider potential changes to MiCA.

In a response to the European Commission’s (EC) targeted consultation on MiCA, the EBA said crypto borrowing and lending should be regulated, including where crypto asset service providers facilitate access to decentralized finance (DeFi) lending protocols.

The regulator recommended that the EC conduct a cost-benefit analysis of legislative changes that could add intermediating crypto borrowing and lending to the list of services regulated under MiCA, potentially adding specific compliance requirements and oversight activity. It also suggested requirements for crypto firms that provide clients access to DeFi lending protocols.

The EBA outlined potential measures including suitability tests for users, leverage limits and additional disclosure requirements. The regulator also raised the possibility of restricting access to lending involving asset-referenced or e-money tokens that require MiCA authorization and introducing a certification regime for DeFi lending protocols.

The EBA said crypto lending is growing across the bloc, citing previous research showing borrowing and lending activities in at least 16 EU member states. It said easier access to DeFi through crypto firms and artificial intelligence tools is increasingly blurring the boundary between centralized and decentralized finance.

The recommendations form part of the EBA’s broader input into the Commission’s review of MiCA, which also covers stablecoin rules, crypto-asset classification and reporting requirements.